Treasury Secretary Janet Yellen’s recent expressions of willingness to foster stronger ties with China heralds a surprising turn of events, reflecting an ambitious perspective on future bilateral relationships.
Her refreshing stance has resulted in several key strategies aiming for collaboration with the global powerhouse.
Building bridges: The genesis of mutual progress
Yellen demonstrated an enthusiastic desire to engage with China during her recent trip to Beijing, asserting it was a crucial step toward global cooperation.
Despite prevailing issues related to China’s trade practices, Yellen exhibited an unabashed willingness to encourage shared interests, insisting on the need for a fertile environment for American corporations to thrive within China’s borders.
Moreover, the Treasury Secretary signaled the importance of harmonizing the restructuring of international debts, particularly for struggling economies.
One of her key focuses during the G20 meeting in India was to facilitate prompt and active involvement of all official bilateral creditors in pending debt reorganizations.
She spotlighted the case of Zambia, expressing optimism that the same principles applied successfully here could expedite debt treatments for other nations like Sri Lanka and Ghana.
Multilateral reforms and global challenges
In addition to her international economic diplomacy, Yellen is pressing for the evolution of World Bank and other multilateral development banks.
She is advocating for comprehensive reforms to adapt these institutions to the demands of an evolving global landscape, tackling new challenges like climate change and pandemics.
Yellen underscored that these institutions need to be ‘better’, not just ‘bigger’, suggesting that mere capital increase should come secondary to integral reforms.
Notably, she projected a potential $200 billion boost in lending over the next decade from these banks, provided they carry out balance sheet reforms.
Her innovative approach extends to seeking the “targeted use” of the World Bank’s concessional financing for global issues, promoting the exploration of lending to sub-sovereign and supra-sovereign entities like the COVAX vaccine initiative.
Lastly, Yellen is steadfast in her commitment to implementing the global corporate minimum tax deal reached in 2021, regardless of the U.S. Congress’s current inaction.
She is optimistic that the negotiations concerning the deal’s Pillar 1, which involves reallocation of taxing rights on large multinationals including tech firms, are nearing a successful conclusion. These dynamic steps by Yellen signal a novel approach to U.S. economic diplomacy.
Her readiness for collaboration with China, a firm hand on the pulse of multilateral reforms, and unwavering commitment to international tax reforms, indeed hint at a dynamic reshaping of global economic landscapes.
In a world reeling from economic challenges, Yellen’s progressive actions could signify a much-needed breakthrough.
